New NBA TV Deal: Exploring the Implications

Experts have been buzzing about the potential new deal between the NBA and its television broadcast partners. A revenue increase from $930 million per year to $2.66 billion has the potential to send ripple effects across the league on the business and basketball sides both. Here's a sampling of the analysis.

Zach Lowe of Grantland.com suggests the league will look to "smooth" cap increases, avoiding a drastic, single-year jump which would benefit certain players and teams over others:

You thought LeBron's free agency in 2010 was an extravaganza? Durant hitting free agency under an $80 million-plus cap would be the craziest summer show in league history, unless he proactively snuffs the madness by taking meetings with only one or two suitors outside of Oklahoma City.

He underscores the importance of getting the process right:

How free agency unfolds over the next three years might influence whether Silver can keep the 30 owners united ahead of a potential lockout. There is real fear across the league that a huge jump in the cap over one or two summers could open a window to create a super-team. The Cavaliers, with three max players, could open up actual cap space...I've already mentioned the spook factor of the Nets, Lakers, and Knicks.

SBNation's Tom Ziller cites the potential for salary inflation:

Players are forecast to receive a combined $2.33 billion in salary this season. Now add an additional $870 million to that. That's an incredible increase ... without any increase in the pool of players receiving salary...Total player salary will increase by 167 percent just because of the TV deal, excluding any other growth.

The salary cap will explode, too. Based on current NBA projections and the new TV deal, basketball-related income in 2016-17 could reach $6.7 billion. If that were the case and benefit costs remained relatively stable, the team salary cap would be about $94 million. For comparison's sake, this season the salary cap is at $63 million.

Matthew Yglesias of Vox.com offers 5 implications inside and outside the sport including erosion of net neutrality:

Rather than selling broadcast rights to networks who then show games on cable television, leagues could simply stream video live to fans. The leagues could then collect advertising and subscription fees directly and cut out the middle man...

The enormous sums of money at stake in live sports broadcasting are going to make the regulatory wars over network neutrality and related internet matters get even hotter. ISPs are not going to be excited about all that revenue passing from advertisers and fans directly into the hands of sports teams while they subsist on generic monthly subscriber fees.

Ken Berger of CBSSports.com details potential struggles between owners and the player's union, including radical changes to the salary cap system:

The next frontier, according to a person with intimate knowledge of the league's labor negotiations, is an old frontier: a hard cap. With so much money entering the system, some owners might want to "push for a hard cap even further," the person said. Owners may also push for spending exceptions, such as the two-tiered mid-level exception and the bi-annual exception, to become things of the past. With the cap going from $63 million to $91 million, who needs exceptions, the league might argue? To which the players might respond: With so much money coming in, who needs a cap at all?

The Oregonian's Joe Freeman suggests that the new deal won't impact LaMarcus Aldridge's deliberations over contract negotiations in 2015:

We haven't talked with Aldridge since the new TV deal was announced, so he hasn't been asked directly. But, from a purely financial standpoint, it dooesn't seem like the new TV deal will have an impact on his future in Portland.

But Blazer's Edge readers are already debating the desirability of a short-term opt-out in Aldridge's next contract, as seen in this comment from Royster:

[The Blazers] don't want to horribly antagonize him, so they'll probably end up giving him an opt-out after year two or three, which would be a compromise between the Blazers having some contract security with him while still giving him a chance to get paid with the new deal. The only reason to give him a 1-year opt-out would be to guard against the possibility of max deals changing under a new CBA and wanting to avoid the prospect of an eventually more painful deal.

With shock waves reverberating everywhere from specific teams to union halls and legal offices, this is only the beginning of the fun in the first major milestone moment of the New NBA.

--Dave blazersub@gmail.com / @DaveDeckard / @Blazersedge